Euro Area Inflation Slows to 1.6%

Euro Area consumer prices rose 1.6 percent from a year earlier after increasing 1.7 percent in July, the European Union statistics office in Luxembourg said.

Today’s report is an initial estimate and the statistics office will release a breakdown of consumer prices on Sept. 15. In July, core inflation, which excludes volatile costs such as energy prices, accelerated to 1 percent from 0.9 percent.

Crude-oil prices have slid 9.6 percent over the past month, leaving households with more money to spend just as a global export-led recovery shows signs of weakening. While L’Oreal SA, the world’s largest cosmetics maker, last week reported a jump in first-half earnings, European Central Bank council member Axel Weber said on Aug. 27 that economic growth will moderate.”

Companies may find it difficult to pass on higher costs as the recovery shows signs of losing momentum. Growth in Europe’s manufacturing and service industries slowed in August and investor confidence in Germany dropped to a 16-month low. German unemployment declined less than economists’ forecast in August, a report released by the Labor Agency in Nuremberg showed today.

Euro Area Inflation Slows to 1.6%, Bloomberg
9/5/2010 6:07:23 PM